The suburbs at the coalface of Perth’s chronic housing shortfall
Perth’s housing crisis is intensifying, according to a new white paper uncovering the metro and regional areas where available dwellings cannot meet the growing demand.
The nationwide analysis of 330 regions released by property advisory firm InvestorKit highlights 25 key markets where housing supply remains critically low, with a significant concentration in metropolitan Perth, regional Queensland and greater Adelaide, where the tight supply is boosting strong growth momentum.
2024 was a strong year for sales in Perth.Credit: Getty Images
InvestorKit chief executive Arjun Paliwal said Australia’s housing market was among the least affordable in the world due to growing demand, low established supply and a decline in national average household size, and Australia was still a long way from resolving these issues.
According to the paper, the three markets facing the most severe supply crunches in 2025 were in Perth, led by Fremantle where population growth hit 14 per cent while the number of for-sale listings decreased nearly 30 per cent. The new house building approval rate has decreased by 77 per cent in the past three years.
Paliwal said local houses were tightly held with an extremely low 1.2 months’ worth of inventory on the market.
“In the rental market, vacancy rates have been hovering at a crisis level of around 0.4 per cent for the past year … leading to a 10 per cent rental growth in a year,” he said.
It was a similar story in the Bayswater-Bassendean area, which increased in population by 7 per cent over the past decade whilst the number of for-sale listings decreased 21 per cent. The new-house building approval rate decreased 65 per cent in the past three years.
Meanwhile, Joondalup’s population increased by 4 per cent in the past decade, while the number of for-sale listings (supply) decreased 31 per cent over the same period. The new-house building approval rate decreased 62 per cent in the past three years.
Paliwal said the housing shortage could not be resolved by simply building more homes.
“If that approach were effective, Australia wouldn’t find itself in this situation despite a 20 per cent increase in total dwelling stock over the past decade,” he said.
“The number of for-sale listings is 30 per cent lower than it was 10 years ago.”
Paliwal said Australia needed a more evenly distributed population, better infrastructure services in regional areas, a more efficient planning system to streamline land supply and provide development certainty, and a fairer tax system to encourage stock mobility.
“Additionally, we must support more diversified housing providers, such as build-to-rent, and foster an investor-friendly environment, free from unnecessary criticism by governments and media,” he said.
“Long-term solutions will take time to implement and deliver meaningful change. In the short term, however, markets experiencing the most severe supply shortages are expected to maintain strong price growth amid the ongoing imbalance between supply and demand.”
CoreLogic head of research Eliza Owen said the recent downturn in property price growth was caused by the widening gap between income, borrowing capacity and home values.
“While the downturn is largely driven by Sydney and Melbourne so far, the general market trend is still experiencing a slowdown in most regions,” she said.
“A cyclical downswing is likely for early 2025, but it may not be large.
She said the downturn in housing values was likely to be shallow and short-lived.
For perspective, the largest ever recorded decline in the national home value index was only 7.7 per cent from October 1982 to March 1983.
Owen also said that on the other hand, it was “hard to see any material growth returning to housing values, at least at a macro level, until housing affordability and loan serviceability improves more substantially.”
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.